Nike 2012 Annual Report Download - page 7

PART I
Trade Relations with China
China represents an important sourcing country and consumer marketing
country for us. Many governments around the world are concerned about
China’s growing and fast-paced economy, compliance with WTO rules,
currency valuation, and high trade surpluses. As a result, a wide range of
legislative proposals have been introduced to address these concerns. We
are working with broad coalitions of global businesses and trade associations
representing a wide variety of sectors (e.g., services, manufacturing, and
agriculture) to help ensure any legislation enacted and implemented
(i) addresses legitimate and core concerns, (ii) is consistent with international
trade rules, and (iii) reflects and considers China’s domestic economy and the
important role it has in the global economic community. We believe other
companies in our industry as well as most other multi-national companies are
in a similar position regarding these trade measures.
In the event any of these trade protection measures are implemented, we
believe that we have the ability to develop, over a period of time, adequate
alternative sources of supply for the products obtained from our present
suppliers. If events prevented us from acquiring products from our suppliers in
a particular country, our operations could be temporarily disrupted and we
could experience an adverse financial impact. However, we believe we could
abate any such disruption, and that much of the adverse impact on supply
would, therefore, be of a short-term nature. We believe our principal
competitors are subject to similar risks.
Competition
The athletic footwear, apparel, and equipment industry is keenly competitive
in the United States and on a worldwide basis. We compete internationally
with a significant number of athletic and leisure shoe companies, athletic and
leisure apparel companies, sports equipment companies, and large
companies having diversified lines of athletic and leisure shoes, apparel, and
equipment, including Adidas, Puma, and others. The intense competition and
the rapid changes in technology and consumer preferences in the markets for
athletic and leisure footwear and apparel, and athletic equipment, constitute
significant risk factors in our operations.
NIKE is the largest seller of athletic footwear and athletic apparel in the world.
Performance and reliability of shoes, apparel, and equipment, new product
development, price, product identity through marketing and promotion, and
customer support and service are important aspects of competition in the
athletic footwear, apparel, and equipment industry. To help market our
products, we contract with prominent and influential athletes, coaches,
teams, colleges and sports leagues to endorse our brands and use our
products, and we actively sponsor sporting events and clinics. We believe
that we are competitive in all of these areas.
Trademarks and Patents
We utilize trademarks on nearly all of our products and believe having
distinctive marks that are readily identifiable is an important factor in creating a
market for our goods, in identifying our brands and the Company, and in
distinguishing our goods from the goods of others. We consider our NIKE®
and Swoosh Design®trademarks to be among our most valuable assets and
we have registered these trademarks in almost 150 jurisdictions. In addition,
we own many other trademarks that we utilize in marketing our products. We
continue to vigorously protect our trademarks against infringement.
NIKE has an exclusive, worldwide license to make and sell footwear using
patented “Air” technology. The process utilizes pressurized gas encapsulated
in polyurethane. Some of the early NIKE AIR®patents have expired, which
may enable competitors to use certain types of similar technology.
Subsequent NIKE AIR®patents will not expire for several years. We also have
over a thousand U.S. and foreign utility patents, and thousands of U.S. and
foreign design patents covering components, manufacturing techniques and
features used in various athletic and leisure shoes, apparel, athletic
equipment, digital devices and golf products. These patents expire at various
times, and patents issued for applications filed this year will last from now to
2026 for design patents, and from now to 2032 for utility patents. We believe
our success depends primarily upon skills in design, research and
development, production, and marketing rather than upon our patent
position. However, we have followed a policy of filing applications for
United States and foreign patents on inventions, designs, and improvements
that we deem valuable.
Employees
As of May 31, 2012, we had approximately 44,000 employees worldwide,
including retail and part-time employees. Management considers its
relationship with employees to be excellent. None of our employees are
represented by a union, except for certain employees in the Emerging
Markets geography, where local law requires those employees to be
represented by a trade union, and in the United States, where certain
employees of Cole Haan are represented by a union. Also, in some countries
outside of the United States, local laws require representation for employees
by works councils (such as in certain countries in the European Union, in
which they are entitled to information and consultation on certain Company
decisions) or other employee representation by an organization similar to a
union, and in certain European countries, we are required by local law to enter
into and/or comply with (industry wide or national) collective bargaining
agreements. There has never been a material interruption of operations due to
labor disagreements.
NIKE, INC. Š2012 Form 10-K 7